When you own a business, you might have a lot of different service providers trying to sell you things. This can include insurance. So how do you know if you need insurance and what kind to buy? Here's how to tell what you need.

What Are Your Risks?

The first step in evaluating insurance is understanding what risks your business faces. This doesn't mean risk the way it would with an investment. It means the risk of losing something or getting sued because of things like fire, theft, bodily injury, or property damage. The job of insurance is to protect you against these risks so that you don't go out of business or lose too much money because of them.

For example, if you're a landscaping company, then all of your equipment is at risk of theft or fire when it's in storage, as well as being damaged in a car accident when you're on the road. When you're working at someone's house, you might accidentally hit them or their property with your equipment or with a rock that you hit and sent flying while mowing. If you stretch a hose across a sidewalk, there's a chance that someone walking by can trip and fall on it.

Once you figure out your risks, you need to get insurance to match those risks. Many businesses will need general liability insurance. You may also need special policies such as commercial auto insurance or professional malpractice insurance.

Do You Have Other Protections?

Some businesses may already have some protections built-in. For example, if you're a corporation, the business owners might be exempt from personal lawsuits against them due to business activities. However, the business's finances could still be at risk even if you have a corporation, so you may still need insurance.

You may also have insurance from other sources. For example, if you lease a truck, you might get insurance from the trucking company instead of having to buy your own policy.

Does a Law or Contract Require You to Have Insurance?

It's common in business for people to require you to have insurance if you want to work for them. If something goes wrong, they know they can file an insurance claim instead of having to wonder if you'd have enough cash to pay the claim on your own. If you're in a specialized type of business with more risk to the public, local laws may also require you to carry insurance.

To learn more about business insurance, contact a local commercial insurance company today.